Concerns with Possible Overheating

Wall Street investors and the Federal Reserve are both dismissing the possibility of the U.S. economy “overheating,” Jim Paulsen said Thursday.

“Overheating is not about growing fast; it’s about demand growing faster than weak supply,” Well Capital Management’s chief investment strategist said in a CNBC “Squawk on the Street” interview. “We can grow at 2 percent supply-side, but I think that Wall Street is making a big mistake, including the Fed, in assuming that we can’t overheat because we’re growing so slowly.”

Paulsen made his remarks a day after the central bank released the minutes from its April meeting, which indicated that “a few” Fed Open Market Committee members believe the U.S. economy can handle higher rates by June.

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